Automotive News: Automakers can learn from Intel’s software decision.

In 1991, no one buying a computer asked what was inside it. The processor was an ingredient, invisible and interchangeable. Then Intel hired Lexicon Branding to name it, and the chip became Pentium. The companies whose logos were on the box became assemblers. The chip inside became the brand customers were looking for. Lexicon founder David Placek argues in Automotive News that the branding of automotive software is at the same turning point.

• Why Nvidia Drive, Snapdragon Digital Chassis, and Android Automotive are accumulating brand equity in the layer where brand value is moving, while STLA Brain, Vehicle Integration System, and MB.OS remain names no customer can recall.
• How Tesla turned Full Self-Driving into a $99-a-month subscription drivers ask for by name, and how BMW has kept iDrive recognizable for 20 years.
• Why Super Cruise and BlueCruise taught drivers a name, but reached for a “Cruise,” a descriptive name any rival can use.

Automotive software branding is a capital allocation decision

Naming the technology is not a marketing expense. It is the mechanism that turns engineering investment into pricing power. The question that every automotive board should be facing is whether it wants to be Pentium or the box Pentium was sold inside.

Read the full article in Automotive News.

By David Placek

Thirty years ago, Intel hired my firm to name a microchip. We called it Pentium. I watched how a single word turned the most invisible part of a computer into the reason people bought one, and turned the companies whose names were on the box into commodity assemblers.

Before “Intel Inside” launched in 1991, no one buying a computer asked what was inside it. The processor was a part you would never see or touch. It was an ingredient. Intel was the first example of the supplier becoming the brand, while the manufacturer becomes the commodity. Here’s why automotive is the next industry to follow this pattern.

The car is becoming software, and the value is moving with it

The numbers are not subtle. By 2030, McKinsey projects the automotive software market will grow from about $31 billion in 2019 to $80 billion, and that 95 percent of new vehicles will ship with advanced connectivity: software-defined function as the baseline, not the option, essentially software on wheels.

The car companies know they are building software. Stellantis has STLA Brain; Ford has Vehicle Integration System; Mercedes has MB.OS. What they do not know is that they are giving the brand value away. Customers can’t name those platforms. The platforms exist, but the brands do not.

Meanwhile, Nvidia Drive, Qualcomm’s Snapdragon Digital Chassis and Google’s Android Automotive show up on dashboards and at every auto show. The suppliers are building brand equity in the exact layer where the value is migrating — and the automakers are paying them to do it. It is the Intel pattern.

Some carmakers are getting it right — and they prove the point

The encouraging news for any automaker willing to act is that there is precedent for making the investment.

Tesla is proof of the economics. Drivers pay for Autopilot and Full Self-Driving by name — FSD is now a $99-a-month subscription, and its one-time price peaked at $15,000. Tesla turned a software capability into a line item customers knowingly pay for. No traditional automaker has converted its driver-assistance software into a brand people ask for and fund like that.

That’s the question driving the grand finale of The Learning Velocity Series, the third and final episode in this three-part conversation on why learning velocity—the ability to build capabilities at the speed of business change—has become the defining competitive advantage.

BMW is the proof of durability and the right architecture. iDrive has been a recognized name for more than 20 years and BMW just relaunched it as Panoramic iDrive. Note the structure: The consumer-facing brand people know — iDrive — sits on top, while the engineering platform beneath it, BMW Operating System X, stays in the background. That is exactly the architecture the others have inverted: They gave the plumbing a name (STLA Brain, MB.OS) and left the thing the customer experiences unbranded.

General Motors’ Super Cruise and Ford’s BlueCruise prove the first half of the lesson and fail the second. Both branded the hands-free-driving capability, and drivers have learned the names. That is real progress past the anonymous platform. But both reached for the weakest kind of name: descriptive. “Cruise” is a word any rival can use, and both do. Recognition without distinctiveness is a brand that defends nothing. That is the difference between owning a category and renting a word.

It’s a capital-allocation problem, not a marketing problem

When automotive executives hear this argument, they mistake it for the CMO’s issue. Brand equity in a software-defined category is not a marketing expense. It is the mechanism by which engineering investment turns into pricing power.

Naming the technology is the decision that determines whether the engineering becomes equity or evaporates. Take the name Pentium compared with STLA Brain. Pentium is coined, processable in 40 languages, distinctive and still how people think about a category they know nothing about. STLA Brain is an internal abbreviation welded to a generic noun; there is no version of it that lives on a dashboard.

What the strongest do — and the window that is closing

The companies that win will brand the technology before the customer asks for it, fund the brand at engineering scale rather than as a sliver of marketing and, above all, name the technology, not just the company. A board can test itself in one meeting: What share of our engineering spend is going into software and artificial intelligence? Can a customer name the technology we built? If a driver described what they love about our car, would they use words we own or words any rival can use?

The first automaker to give its software platform a real, coined, ownable brand — a name a driver asks for, the way they ask for FSD or recognize iDrive — will set the category’s vocabulary the way Pentium set the vocabulary of processors, and every competitor that follows will describe its own technology in the leader’s words.

This is not a product cycle problem. It is a board-meeting-this-quarter problem. The question is not whether to brand your software. It is whether you want to be Pentium — or the box Pentium was sold inside.

David Placek is founder of Lexicon Branding.